In its recent decision denying certification under the Alberta Class Proceedings Act ("CPA"), the Alberta Court of Queen's Bench (the "Court") reinvigorated its role as a gatekeeper providing more serious scrutiny of the evidence of loss at this early stage in a potential class proceeding.

Other courts have also taken steps in recent years to assert more of a gatekeeper function, however those decisions have largely been overturned on appeal based on the Supreme Court of Canada ("SCC") jurisprudence. The key issue flowing from this decision may ultimately be whether appellate courts are prepared, absent legislative change, to interpret the test for certification as sufficiently flexible to respond to cases where it is clear that the evidence will not be able to substantiate the allegations in a pleading.

Setoguchi v. Uber B.V., 2021 ABQB 18 involved a claim against several Uber entities based on an unauthorized access to digital personal information it held about its drivers and customers. The data at issue was personal, but not necessarily private, information including name, email address, telephone number, encrypted passwords, user IDs, and user ratings. Importantly, there was no evidence of any harm to class members as a result of the breach, simply a bare pleading of harm.  In fact, there was evidence in the record that no compensable loss had been suffered by class members.  The evidence concerning no compensable loss clearly troubled the Court.

The Court framed the key issue in the case in terms of commonality of loss:

The real issue in this case is whether, assuming otherwise provable causes of action liability (contract, negligence, breach of statute, etc.), and compliance with the requirements for certification under s. 5(1) and (2) of the Class Proceedings Act, SA 2003, c. C-16.5 (Act), there must be, and is, "some evidence" of or "some basis in fact" for any real resulting common harm, loss or damage from the alleged common law or statutory breaches.

However, despite framing the issue in terms of commonality of loss, the Court focused on the lack of evidence of loss as the following passage demonstrates:

...it seems to me that, if the "screening process" [on the certification motion] is to be "meaningful", without determining the full legal and substantive merits of the litigation, including whether all elements of the Act to establish certification have been met, there must be some evidence or basis in fact for loss or damage. ... the Representative Plaintiff must demonstrate at least some meaningful substance to the case before certification should be granted.  It surely cannot be merely that, in effect, one needs only to speculate at the certification stage, only "establish [loss or damage] at the common issues trial" ... and undoubtedly seeking a settlement in the interval.  This is the substance of why certification must and does fail in this case.

While the difference may appear semantic, it marks a significant shift in terms of the law applicable to certification motions or, at minimum, the application of existing legal principles.

In denying certification, the Court considered each of the requirements to be satisfied under s. 5 of the CPA.  The Court adhered to the principle set down by the Supreme Court of Canada ("SCC") in Hollick v. Toronto (City),  that a proposed representative plaintiff must show some basis in fact for all elements of certification under s. 5 of the CPA with the exception of s. 5(1)(a).  Under s. 5(1)(a) of the CPA, the potential representative plaintiff does not need to lead evidence to show 'some basis in fact' of its cause of action and will only be unsuccessful in satisfying the requirement under s. 5(1)(a) where it is plain and obvious the pleadings disclose no cause of action.  While the Court held, on an application of this test, that the claim, having been properly pleaded as to damages, would have been certified despite the fact that there was evidence that no loss had been suffered, the Court lamented the state of the law on this point which it held in "retrospect" was a "flawed legal presumption of presumed deemed fact in pleading."   While the Court agreed that based on precedent from the SCC it was restricted in applying closer scrutiny to the requirement in s. 5(1)(a) to show a cause of action, it was not so restricted in considering the need to weed out unmeritorious or de minimis claims as part of its finding under s. 5(1)(d) that a class proceeding would not be the preferable procedure.  In finding a class proceeding would not be preferable, the Court relied on the decision of the Ontario Superior Court in Berg v. Canadian Hockey League that added the consideration of proportionality to the list of factors to be considered in an analysis of the preferable procedure.  In Berg, certification of some of the causes of action pleaded was denied on the basis that proportional access to justice did not require the certification of all the claims, the certification of which would have caused 'enormous' problems of manageability for the class proceeding.   

The application of the various factors under s. 5(1)(d) led to distinct findings by the Court with a dismissal of some or all of the certification application under each head. However, in its summary conclusions under s. 5(1)(d), the Court emphasized, among other factors, its reliance on the principles of proportional adjudication from Hyrniak, its gatekeeper function and the need to weed out unmeritorious claims as supporting the dismissal of the proposed representative plaintiff's application on the basis that a class proceeding was not preferable.

This decision, granted as it was by the Associate Chief Justice of the Court, may signal movement toward a more restrictive approach to the granting of certification.  The Court appears to be suggesting the Bench take a much closer look during certification at the quality of the matters being brought forward and consider scarce juridical resources in deciding whether matters should proceed as class action litigation. This approach to the consideration of judicial economy, one of the three pillars of class proceedings, provides a much needed balance to the law on certification.

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